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| Andrew Wait and Vladimir Smirnov |
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| ''Industry sunk costs and entry dynamics'' |
| ( 2004, Vol. 12 No.4 ) |
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| We explore an investment game where industry sunk costs provide anincentive for a firm to be a follower into the market as opposedto a leader. For some parameter values, every firm could have adominant strategy to wait, even though immediate entry is sociallyoptimal - this is a like prisoners' dilemma. In equilibrium, afirm is more likely to have a dominant strategy to wait with anincrease in the number of potential entrants. Finally, theequilibrium can display an entry cascade. |
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| Keywords: coordination game |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
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| Manuscript Received : May 25 2004 | | Manuscript Accepted : Jun 04 2004 |
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